October 12, 2010 / 10:35 AM / 7 years ago

Fiercer smartphone battle on tap for handset makers

HELSINKI/SEOUL (Reuters) - Cellphone vendors’ views on sales during the year-end holiday season will be in focus when top handset makers report quarterly results, starting with Sony Ericsson on Friday.

The cellphone market overall is set to grow around 11 percent this year, led by smartphone sales which are expected to increase more than 50 percent as high-end focused vendors like Apple and HTC see a surge in demand.

Further increasing the rivalry at the high-end, Microsoft is starting its last-ditch attempt to stage a comeback with nine new phone models.

“We expect price erosion and margin pressures, which have characterized 2010, to intensify in the final quarter with an increased supply of high-tier devices,” said Geoff Blaber, analyst with wireless research firm CCS Insight.

In the July-September quarter the cellphone market is forecast to grew 10.1 percent from a year ago, helped by recovering economies and boosted by strong growth in smartphones, a Reuters poll of 32 analysts showed.

Among top smartphone vendors, HTC and Research in Motion have already reported strong demand in the quarter.

“The big question mark here is European consumer demand, which may have been a bit muted in the August-September period,” said Tero Kuittinen, analyst at MKM Partners.

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Helped by good demand for its new Google phones, Sony Ericsson, the world’s fifth-largest handset vendor by volume, is expected say it sold 12 million phones in the September quarter, when it reports on October 15.

Google’s Android phones also helped Taiwan’s HTC Corp, the world’s No. 4 smartphone brand, which reported a near doubling in third-quarter profit on October 6.

Apple, No 6 in volume but the most profitable handset maker, is expected to unveil sales of 11.5 million iPhones when it reports on October 18. Nokia, the volume leader, will report on October 21, and No 7 Motorola on October 28.

Nokia Chief Executive Stephen Elop will present results for the first time having taken the helm of the company last month. The group is expected to have sold 115 million phones in the quarter, growing slightly but losing some market share to Samsung Electronics and Apple.

Korean cellphone vendors Samsung and LG Electronics are due to report at the end of the month.

Samsung showed a strong recovery last quarter, driven by the success of its Galaxy S smartphone which sold more than 5 million units since its June launch. It last month raised its 2010 smartphone sales target to 25 million units from 18 million.

LG, however, is facing more challenging times ahead.

It replaced its group CEO and named a new head for its loss-making telecoms division as it battles to turn around the struggling business.

Analysts expect it to post a record loss of between 300 billion Korean won ($265.5 million) and 380 billion in the quarter on mobile phone sales.

“It would be difficult for LG to make a quick turnaround as its products still lag the competition to a large extent,” said Kim U-no, an analyst at Hanwha Securities.

“LG needs stronger lineup in the popular Android segment but it has no immediate rollouts planned. It’ll be another disappointing quarter.”

(Editing by David Holmes)

$1=1129.9 Korean Won

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